Beijing: China may allow the yuan to appreciate by June 30 to curb inflation while avoiding a one- time jump in value that might endanger export jobs, a survey of analysts showed.
Twelve of 19 respondents surveyed by Bloomberg said the central bank will allow the currency to float more freely this quarter, five expect it to happen by September 30, and the rest expect the move by the year-end. Eleven see no one-off revaluation, including state-owned Bank of China and China Construction Bank. Fifteen predict a wider daily trading range.
China, which relies on manufacturers to help create jobs for 230 million migrant workers, will safeguard "its own econ-omic and social development needs" when deciding exchange rate policy, President Hu Jintao said in Washington on Monday. Allowing the currency to strengthen would temper inflation after a 17 per cent surge in import prices in March from a year earlier helped cause China's first trade deficit since 2004.
"China won't allow one-off revaluation when it's faced with foreign pressure," said Zhao Qingming, a senior analyst in Beijing at Construction Bank, the country's second largest lender. Even so, he added, "China may let the yuan exit the dollar's peg at the end of the second quarter or the start of the third as the rebound in the economy is quite good."
The trading band will be widened to between 0.75 per cent and three per cent either side of the central bank's daily reference rate, the survey showed. In May 2007, the central bank widened the daily trading band to 0.5 per cent, from 0.3 per cent.
The median estimate in the survey is for the yuan to strengthen 3.1 per cent to 6.62 per dollar by the year-end.
Estimates ranged from 6.4 yuan to 6.8 yuan in the survey carried out since April 9.
The yuan was revalued by 2.1 per cent on July 21, 2005, after China ended the decade-long peg to the dollar and introduced a "managed float" against a basket of currencies.
